(1) For the purposes of section 228MA the “present value” of an amount is to be calculated by using the interest rate implicit in the lease.
(2) The general rule is that the interest rate implicit in the lease is the interest rate that would apply in accordance with normal commercial criteria, including, in particular, generally accepted accounting practice (where applicable).
(3) If the interest rate implicit in the lease cannot be determined in accordance with subsection (2), it is taken to be the incremental borrowing rate.
(4) For this purpose, the incremental borrowing rate has the same meaning as it has for accounting purposes.
(5) The Treasury may by regulations amend this section for the purpose of replacing references to the incremental borrowing rate with references to another rate.
(1) For the purposes of section 228MA “rental rebate” means any sum payable to the lessee that is calculated by reference to the termination value of the asset.
(2) The general rule is that the termination value of an asset is the value of the asset at or about the time when the lease terminates.
(3) Calculation by reference to the termination value includes calculation by reference to any one or more of—
(a) the proceeds of sale, if the asset is sold,
(b) any insurance proceeds, compensation or similar sums in respect of the asset, and
(c) an estimate of the market value of the asset.
(4) Calculation by reference to the termination value also includes—
(a) determination in a way which, or by reference to factors or criteria which, might reasonably be expected to produce a broadly similar result to calculation by reference to the termination value, or
(b) any other form of calculation indirectly by reference to the termination value.
(1) This section applies if—
(a) a person carrying on a qualifying activity incurs capital expenditure on the provision of plant or machinery for the purposes of the qualifying activity, and
(b) the expenditure is incurred under a contract providing that the person shall or may become the owner of the plant or machinery on the performance of the contract.
(2) If—
(a) the person assigns the benefit of the contract to another before the plant or machinery is brought into use, and
(b) the circumstances are such that allowances to the assignee fall to be restricted under this Chapter,
section 68(3) (disposal value where person ceases to be entitled to benefit of contract before plant or machinery brought into use) does not apply.
(3) If the expenditure is incurred on the provision of plant or machinery for leasing under a finance lease—
(a) section 67(3) (expenditure due to be incurred under contract treated as incurred when plant or machinery brought into use), and
(b) section 68 (disposal values where person ceases to be entitled to benefit of contract),
do not apply.
(4) Subsection (5) applies if—
(a) a person is treated under section 67(4) as ceasing to own plant or machinery, and
(b) as a result of subsection (2) or (3), section 68(3) or (as the case may be) section 68 does not apply.
(5) If this subsection applies—
(a) the disposal value is the total of—
(i) any relevant capital sums, and
(ii) any capital expenditure that the person would have incurred if he had wholly performed the contract, but
(b) the person is to be treated, for the purpose only of bringing the disposal value into account, as having incurred the capital expenditure mentioned in paragraph (a)(ii) in the relevant chargeable period.
(6) “Relevant capital sums” means capital sums that the person receives or is entitled to receive by way of consideration, compensation, damages or insurance money in respect of—
(a) his rights under the contract, or
(b) the plant or machinery.
(7) The relevant chargeable period, for the purposes of subsection (5)(b), is the chargeable period in which the person is treated under section 67(4) as ceasing to own the plant or machinery.
229A Transfer followed by hire-purchase etc: restrictions on hirer's allowances
(1) This section applies where—
(a) a person (“S”) transfers plant or machinery to another person (“B”),
(b) at any time after the date of the transfer, the plant or machinery is available to be used by S, or a person (other than B) who is connected with S (“CS”),
(c) it is available to be so used under a contract which provides that S or CS is to or may become the owner of the plant or machinery on the performance of the contract, and
(d) S or CS incurs capital expenditure on the provision of the plant or machinery under that contract.
(2) No annual investment allowance or first-year allowance is to be made in respect of the expenditure of S or CS under the contract.
(3) The amount, if any, by which E exceeds D is to be left out of account in determining the available qualifying expenditure of S or CS.
(4) E is the capital expenditure of S or CS on the provision of the plant or machinery under the contract referred to in subsection (1)(c).
(5) If S is required to bring a disposal value into account under this Part because of the transfer referred to in subsection (1)(a), D is that disposal value.
(5A) D is nil if—
(a) S is not required to bring a disposal value into account under this Part because of the transfer referred to in subsection (1)(a), and
(b) at any time before that transfer S or a linked person became owner of the plant or machinery without incurring either capital expenditure or qualifying revenue expenditure on its provision.
(6) Otherwise, D is whichever of the following is the smallest—
(a) the market value of the plant or machinery;
(b) if S incurred capital expenditure on the provision of the plant or machinery before the transfer referred to in subsection (1)(a), the amount of that expenditure;
(c) if a person connected with S incurred capital expenditure on the provision of the plant or machinery before that transfer, the amount of that expenditure.
(7) Sections 214 and 215 do not apply in relation to the contract referred to in subsection (1)(c).
(8) Section 70Y(3) applies to references in this section to a transfer of plant or machinery by a person.
(9) For the purposes of this section a transfer involving the grant of a lease takes place on the commencement of the term of the lease.
(10) Linked person”, in relation to plant or machinery, means a person—
(a) who owned the plant or machinery at any time before the transfer referred to in subsection (1)(a), and
(b) who was connected with S at any time between—
(i) the time when the person became owner of the plant or machinery, and
(ii) the time of the transfer referred to in subsection (1)(a).
(11) Expenditure on the provision of plant or machinery is “qualifying revenue expenditure” if it is expenditure of a revenue nature—
(a) that is at least equal to the amount of expenditure that would reasonably be expected to have been incurred on the provision of the plant or machinery in a transaction between persons dealing with each other at arm's length in the open market, or
(b) that is incurred by the manufacturer of the plant or machinery and is at least equal to the amount that it would have been reasonable to expect to have been the normal cost of manufacturing the plant or machinery.
(1) The restrictions in sections 217 and 218 do not apply in relation to any plant or machinery if—
(a) the relevant transaction is within section 213(1)(a) or (b),
(b) the case does not fall within section 215, and
(c) the conditions in subsection (3) are met.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) The conditions are that—
(a) the plant or machinery has never been used before the sale or the making of the contract,
(b) S’s business, or part of S’s business, is the manufacture or supply of plant or machinery of that class, and
(c) the sale is effected or the contract made in the ordinary course of that business.
(1) For the purposes of this Chapter one person is to be treated as connected with another if—
(a) they would be treated as connected under section 575, or
(b) they are to be treated as connected under subsection (2).
(2) If—
(a) a public authority has at any time acquired plant or machinery from another public authority otherwise than by purchase, and
(b) it is directly or indirectly as a consequence of having been leased under a finance lease that the plant or machinery is available for any use to which it is put,
the authority from whom the plant or machinery was acquired is to be treated, in relation to that plant or machinery, as connected with the acquiring authority and with every person connected with the acquiring authority.
(3) In subsection (2), “public authority” includes the Crown or any government or local authority.
(4) Subsection (2) does not apply in relation to section 219 (meaning of “finance lease”).
This Chapter needs to be read with sections 241 to 245 (provision for cases where a person involved in a relevant transaction or a sale and finance leaseback incurs an additional VAT liability or receives an additional VAT rebate).
For the purposes of this Chapter—
(a) “additional VAT liability” and “additional VAT rebate” have the meaning given by section 547,
(b) the time when—
(i) a person incurs an additional VAT liability, or
(ii) an additional VAT rebate is made to a person,
is given by section 548, and
(c) the chargeable period in which an additional VAT liability or an additional VAT rebate accrues is given by section 549.
235 Additional VAT liability treated as qualifying expenditure
(1) This section applies if a person—
(a) has incurred qualifying expenditure (“the original expenditure”), and
(b) incurs an additional VAT liability in respect of the original expenditure at a time when the plant or machinery is provided for the purposes of the qualifying activity.
(2) The additional VAT liability is to be treated as qualifying expenditure—
(a) which is incurred on the same plant or machinery as the original expenditure, and
(b) which may be taken into account in determining the person’s available qualifying expenditure for the chargeable period in which the additional VAT liability accrues.
(1) Subsection (2) applies if—
(a) the original expenditure was first-year qualifying expenditure, and
(b) the additional VAT liability is incurred at a time when the plant or machinery is provided for the purposes of the qualifying activity.
(2) The additional VAT liability is to be regarded for the purposes of this Part as first-year qualifying expenditure which—
(a) is incurred on the same plant or machinery and is the same type of first-year qualifying expenditure as the original expenditure, and
(b) entitles the person incurring the liability to a first-year allowance for the chargeable period in which the liability accrues.
(3) Subsections (3) and (4) of section 52 apply to first-year qualifying expenditure constituted by the additional VAT liability as they apply to other first-year qualifying expenditure.
(3A) Subsection (3B) applies if—
(a) the original expenditure was AIA qualifying expenditure, and
(b) the additional VAT liability is incurred at a time when the plant or machinery is provided for the purposes of the qualifying activity.
(3B) The additional VAT liability is to be regarded for the purposes of this Part as AIA qualifying expenditure incurred on the same plant or machinery as the original expenditure in the chargeable period in which the liability accrues.
(3C) Section 51A(7) applies to AIA qualifying expenditure constituted by the additional VAT liability as it applies to other AIA qualifying expenditure.
(4) This section is subject to sections 237 and 241.
(1) An additional VAT liability is not AIA qualifying expenditure or first-year qualifying expenditure if at the time when the liability is incurred the plant or machinery is used for overseas leasing which is not protected leasing.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
238 Additional VAT rebate generates disposal value
(1) This section applies if—
(a) a person has incurred qualifying expenditure (“the original expenditure”),
(b) an additional VAT rebate is made to the person in respect of the original expenditure, and
(c) the person owns the plant or machinery on which the original expenditure was incurred at any time in the chargeable period in which the rebate is made.
(2) If (apart from this section) there would not be a disposal value to be brought into account in respect of the plant or machinery for the chargeable period in which the rebate accrues, the amount of the rebate must be brought into account as a disposal value for that chargeable period.
(3) If (apart from this section) there would be a disposal value to be brought into account in respect of the plant or machinery for the chargeable period in which the rebate accrues, the amount of the rebate must be brought into account as an addition to that disposal value.
239 Limit on disposal value where additional VAT rebate
(1) Subsection (2) applies if—
(a) a person is required to bring a disposal value into account in respect of any plant or machinery, and
(b) any additional VAT rebate or rebates has or have been made to him in respect of the original expenditure.
(2) The amount of the disposal value is limited to the amount of the original expenditure reduced by the total of any additional VAT rebates accruing in previous chargeable periods in respect of that expenditure.
But this is subject to subsections (3) to (6).
(3) Subsection (4) applies if the disposal value is required to be brought into account by section 238(2) (disposal value for additional VAT rebate on its own).
(4) The amount of the disposal value to be brought into account is limited to the amount of the original expenditure reduced by the amount of any disposal values brought into account in respect of the plant or machinery as a result of any earlier event.
(5) If—
(a) the person required to bring the disposal value into account has acquired the plant or machinery as a result of a transaction which was, or a series of transactions each of which was, between connected persons, and
(b) an additional VAT rebate has been made to any party to the transaction, or to any of the transactions,
the amount of the disposal value is limited to the greatest relevant expenditure of any of the parties.
(6) The relevant expenditure of a party is that party’s qualifying expenditure on the provision of the plant or machinery, less any additional VAT rebate made to that party.
(1) This section applies if a person—
(a) was entitled to a balancing allowance for the final chargeable period for a short-life asset pool for a qualifying activity,
(b) has incurred, after the end of that period, an additional VAT liability in respect of the original expenditure on the provision of the short-life asset, and
(c) has not brought the liability into account in determining the amount of the balancing allowance.
(2) The person is entitled to a further balancing allowance, of an amount equal to the additional VAT liability, for the chargeable period of the qualifying activity in which the additional VAT liability accrues.
241 No annual investment allowance or first-year allowance in respect of additional VAT liability
(1) This section applies if—
(a) one person (“B”) enters into a transaction with another person (“S”) which is a relevant transaction for the purposes of Chapter 17 (anti-avoidance), and
(b) an annual investment allowance or a first-year allowance in respect of B’s expenditure under the relevant transaction is prohibited by section 217(1)....
(2) No annual investment allowance or first-year allowance is to be made in respect of any additional VAT liability incurred by B in respect of his expenditure under the relevant transaction.
(3) Any annual investment allowance or first-year allowance which is prohibited by subsection (2), but which has already been made, is to be withdrawn.
242 Restriction on B’s qualifying expenditure: general
(1) This section applies instead of section 218 (restriction on B’s qualifying expenditure in case other than sale and finance leaseback) if—
(a) apart from this subsection, section 218 would apply, and
(b) an additional VAT liability has been incurred by, or an additional rebate has been made to, any of the persons mentioned in that section.
(2) The amount, if any, by which E exceeds D is to be left out of account in determining B’s available qualifying expenditure.
E and D are defined in subsections (3) to (6).
(3) Except where subsection (6) applies, E is the sum of—
(a) B’s expenditure under the relevant transaction, and
(b) any additional VAT liability incurred by B in respect of that expenditure.
(4) If S is required to bring a disposal value into account under this Part because of the relevant transaction, D is that disposal value.
(4A) D is nil if—
(a) S is not required to bring a disposal value into account under this Part because of the relevant transaction, and
(b) at any time before that transaction S or a linked person became owner of the plant or machinery without incurring either capital expenditure or qualifying revenue expenditure on its provision.
(5) Otherwise, D is whichever of the following is the smallest—
(a) the market value of the plant or machinery;
(b) if S incurred capital expenditure on the provision of the plant or machinery, the amount of that expenditure—
(i) increased by the amount of any additional VAT liability incurred by S in respect of that expenditure, and
(ii) reduced by the amount of any additional VAT rebate made to S in respect of that expenditure;
(c) if a person connected with S incurred capital expenditure on the provision of the plant or machinery, the amount of that expenditure—
(i) increased by the amount of any additional VAT liability incurred by that person in respect of that expenditure, and
(ii) reduced by the amount of any additional VAT rebate made to that person in respect of that expenditure.
(6) If—
(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) subsection (5) applies and the smallest amount under that subsection is the market value of the plant or machinery, and
(c) that value is determined inclusive of value added tax,
E is the amount of B’s expenditure under the relevant transaction.
(7) Linked person”, in relation to plant or machinery, means a person—
(a) who owned the plant or machinery at any time before the relevant transaction, and
(b) who was connected with S at any time between—
(i) the time when the person became owner of the plant or machinery, and
(ii) the time of the relevant transaction.
(8) Expenditure on the provision of plant or machinery is “qualifying revenue expenditure” if it is expenditure of a revenue nature—
(a) that is at least equal to the amount of expenditure that would reasonably be expected to have been incurred on the provision of the plant or machinery in a transaction between persons dealing with each other at arm's length in the open market, or
(b) that is incurred by the manufacturer of the plant or machinery and is at least equal to the amount that it would have been reasonable to expect to have been the normal cost of manufacturing the plant or machinery.
244 B’s qualifying expenditure if lessor not bearing non-compliance risk
An additional VAT liability is not qualifying expenditure for the purposes of this Part if—
(a) section 225 (restriction on B’s qualifying expenditure if lessor not bearing compliance risk) applies, and
(b) the additional VAT liability is incurred—
(i) by B, in respect of the expenditure referred to in section 225(2)(a), or
(ii) by the lessor, in respect of the expenditure referred to in section 225(2)(b).
245 Effect of election under section 227 on additional VAT liability
(1) This section applies if—
(a) an election is made under section 227 (sale and leaseback or sale and finance leaseback: election for special treatment), and
(b) an additional VAT liability is incurred by S in respect of the capital expenditure incurred on the provision of the plant or machinery to which the election relates.
(2) The effect of the election is—
(a) that no allowance is to be made to S under this Act in respect of the additional VAT liability, and
(b) that the additional VAT liability must be left out of account in determining Ss’ available qualifying expenditure for any period.
(1) All such assessments and adjustments of assessments are to be made as are necessary to give effect to sections 241 to 245.
(2) Section 232 (meaning of connected person) applies for the purposes of sections 242 and 243.
(1) If the qualifying activity of a person who is entitled or liable to an allowance or charge for a chargeable period is a trade, the allowance or charge is to be given effect in calculating the profits of that person’s trade, by treating—
(a) the allowance as an expense of the trade, and
(b) the charge as a receipt of the trade.
(1A) Subsection (1) is subject to section 6E (giving effect to allowances and charges: NI rate activity cases).
(2) See Chapter 16A for provision restricting in certain circumstances the ways in which effect may be given to an allowance by virtue of subsection (1)(a).
If the qualifying activity of a person who is entitled or liable to an allowance or charge for a chargeable period is a UK property business, the allowance or charge is to be given effect in calculating the profits of that business, by treating—
(a) the allowance as an expense of that business, and
(b) the charge as a receipt of that business.
If the qualifying activity of a person who is entitled or liable to an allowance or charge for a chargeable period is an ... overseas property business, the allowance or charge is to be given effect in calculating the profits of that business, by treating—
(a) the allowance as an expense of that business, and
(b) the charge as a receipt of that business.
If the qualifying activity of a person who is entitled or liable to an allowance or charge for a chargeable period is carrying on a profession or vocation, the allowance or charge is to be given effect in calculating the profits or gains of that person’s profession or vocation, by treating—
(a) the allowance as an expense of the profession or vocation, and
(b) the charge as a receipt of the profession or vocation.
If the qualifying activity of a person who is entitled or liable to an allowance or charge for a chargeable period is a concern listed in section 12(4) of ITTOIA 2005 or section 39(4) of CTA 2009 (mines, transport undertakings etc.) the allowance or charge is to be given effect in calculating the profits of the concern under Chapter 2 of Part 2 of ITTOIA 2005 or, as the case may be, under Case I of Schedule D, by treating—
(a) the allowance as an expense of the concern, and
(b) the charge as a receipt of the concern.
(1) This section applies if the qualifying activity of a person entitled to an allowance or liable to a charge for a chargeable period is managing the investment business.
(2) The allowance is, as far as possible, to be given effect by deducting the amount of the allowance from any income for the period of the business; and section 1233 of CTA 2009 (addition of allowances to company’s expenses of management) applies only in so far as it cannot be given effect in this way.
(3) The charge is to be given effect by treating the amount of the charge as income of the business.
(4) Except as provided by subsections (2) and (3), the Corporation Tax Acts apply in relation to the allowance or charge as if they were required to be given effect in calculating the profits of that person’s trade for the purposes of Part 3 of CTA 2009.
(5) Corresponding allowances or charges in the case of the same plant or machinery are not to be made under this Part both under this section and in another way.
(6) Expenditure to which this section applies is not to be taken into account otherwise than under this Part or as provided by section 1233 or 1244A of CTA 2009.
(7) This section is subject to sections 682(3) and 699(3) of CTA 2010.
(1) Sections 255 and 256 apply if a company which is carrying on any long-term business is entitled or liable to any allowances or charges for a chargeable period in respect of plant or machinery consisting of a management asset.
(2) In this Chapter “management asset” has the same meaning as in Chapter 1 of Part 12 (life assurance business).
(1) This section applies if the long-term business of the company consists of—
(a) basic life assurance and general annuity business, and
(b) non-BLAGAB long-term business.
(2) In that case—
(a) any allowance to which the company is entitled for a chargeable period in respect of a management asset, and
(b) any charge to which it is liable for a chargeable period in respect of a management asset,
must be apportioned between the businesses in accordance with Chapter 7 of Part 2 of FA 2012.
(1) Subsection (2) applies if a company—
(a) carries on basic life assurance and general annuity business, and
(b) is charged to tax in accordance with the I - E rules in respect of that business.
(2) If this subsection applies—
(a) any allowances (or parts of allowances) to which the company is entitled in respect of the basic life assurance and general annuity business are to be given effect by treating them for the purposes of section 76 of FA 2012 as deemed BLAGAB management expenses for the chargeable period in question, and
(b) any charges (or parts of charges) to which the company is liable in respect of that business are to be given effect by treating the company as receiving for the chargeable period in question an amount which is equal to the amount of the charges (or parts of charges) and to which the charge to corporation tax on income applies.
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) Allowances and charges to which sections 255 and 256 apply are not to be given effect otherwise than in accordance with those sections.
(2) Subsection (1) does not prevent any allowance which is to be given effect under those sections from being taken into account in any calculation for the purposes of—
(a) section 93(5) of FA 2012 (minimum profits test), or
(b) section 103 of FA 2012 (rules for determining policyholders' share of I - E profit).
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) This section applies for income tax purposes if the qualifying activity of a person entitled or liable to an allowance or charge for a chargeable period (“the current tax year”) is special leasing of plant or machinery.
(2) Subject to subsection (3), the allowance is to be given effect by deducting it from the person’s income for the current tax year from any qualifying activity the person has of special leasing of plant or machinery.
(3) If the plant or machinery leased under the special leasing was not used for the whole or any part of the current tax year for the purposes of a qualifying activity carried on by the lessee—
(a) the allowance, or
(b) a proportionate part of it,
is to be given effect by deducting the allowance, or the part of the allowance, from the person’s income for the current tax year from that special leasing only.
(3A) The allowance or (as the case may be) the proportionate part of the allowance is given effect at Step 2 of the calculation in section 23 of ITA 2007.
(4) Any charge is to be given effect by treating the charge as income to be assessed to income tax.
(5) If the amount to be deducted from a description of income specified in subsection (2) or (3) exceeds the person’s income of that description for the current tax year, the excess must be deducted from the person’s income of the same description for the next tax year, and so on for subsequent tax years.
(6) For the purposes of this section, income from special leasing of plant or machinery includes any charge treated as income under subsection (4).
(7) In this section, references to deducting an allowance (or a part of an allowance) from income include setting it off against income.
(1) This section applies for corporation tax purposes if the qualifying activity of a company entitled or liable to an allowance or charge for a chargeable period (“the current accounting period”) is special leasing of plant or machinery.
(2) Subject to subsection (3), the allowance is to be given effect by deducting it from the company’s income for the current accounting period from any qualifying activity it has of special leasing of plant or machinery.
(3) If the plant or machinery leased under the special leasing was not used for the whole or any part of the current accounting period for the purposes of a qualifying activity carried on by the lessee—
(a) the allowance, or
(b) a proportionate part of it,
is to be given effect by deducting the allowance, or the part of the allowance, from the company’s income for the current accounting period from that special leasing only.
(4) Any charge is to be given effect by treating the charge as income from special leasing of plant or machinery.
260 Special leasing: corporation tax (excess allowance)
(1) This section applies if the amount to be deducted from a description of income specified in section 259(2) or (3) exceeds the company’s income of that description for the current accounting period.
(2) Subject to subsections (3) to (6), the excess must (if the company remains within the charge to tax) be deducted from the company’s income of the same description for the next accounting period (and so on for subsequent accounting periods).
(3) The company may, on making a claim, require the excess to be deducted from any profits—
(a) of the current accounting period, and
(b) if the company was then within the charge to tax, of any previous accounting period ending within the carry-back period.
(4) The carry-back period is a period which—
(a) is of the same length as the current accounting period, and
(b) ends at the start of the current accounting period.
(5) If the preceding accounting period began before the start of the carry-back period, the total amount of deductions that may be made from the profits of the preceding accounting period under—
(a) subsection (3), and
(b) any corresponding provision of the Corporation Tax Acts relating to losses,
must not exceed a part of those profits proportionate to the part of the period falling within the carry-back period.
(6) A claim under subsection (3) must be made no later than 2 years after the end of the current accounting period.
(7) If the deduction of the allowance (or of part of it) was subject to the restriction in section 259(3)—
(a) subsections (3) to (6), and
(b) sections 99 and 113 of CTA 2010 (group relief),
do not apply in relation to the allowance (or part of it).
(8) In this section “profits” has the same meaning as in Part 2 of CTA 2009 (see section 2(2) of that Act).
In the case of a company which is carrying on any long-term business—
(a) subsections (3) to (6) of section 260, and
(b) sections 99 and 113 of CTA 2010 (group relief),
do not apply in relation to an allowance to which the company is entitled under section 19 (special leasing of plant or machinery).
(1) This section applies for corporation tax purposes if—
(a) a company carries on a business in partnership with other persons in a chargeable period of the partnership,
(b) the business (“the leasing business”) is, on any day in that period, a business of leasing plant or machinery,
(c) the company is entitled to an allowance under section 19 (special leasing of plant or machinery) for any chargeable period comprised (wholly or partly) in the chargeable period of the partnership, and
(d) the interest of the company in the leasing business during the chargeable period of the partnership is not determined on an allowable basis.
(2) Subsections (3) to (6) of section 260 do not apply in relation to the allowance.
(3) For the purposes of this section—
(a) “business of leasing plant or machinery” has the same meaning as in Chapter 4 of Part 9 of CTA 2010 (sales of lessors: leasing business carried on by a company in partnership), and
(b) section 887 of CTA 2010 applies for determining whether the interest of the company in the leasing business during the chargeable period of the partnership is determined on an allowable basis.
If the qualifying activity of a person who is entitled or liable to an allowance or charge for a chargeable period is an employment or office, the allowance or charge is to be given effect, by treating—
(a) the allowance as a deduction from the taxable earnings from the employment or office, and
(b) the charge as earnings of the employment or office.